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Subscribe to RSSBEIJING – The recent political standoff between China and Japan thrust so-called rare earth minerals – critical to the manufacture of 21st century technology like cell phones and digital cameras to high-tech weaponry – into the limelight as a national security concern for the United States.
Stemming from a dispute over a Chinese fishing boat captain held by Japan, China, which controls 97 percent of processing of the world’s rare earth minerals, reportedly blocked their export to Japan.
The claim was quickly denied by Beijing, but the mere suggestion that China was willing or capable of such an embargo sent shockwaves through U.S. businesses, economic planners and Pentagon strategists.
That’s because a similar embargo against the United States could seriously threaten America’s ability to source elements used in the manufacture of everything from hybrid car engines to the precision laser-guided smart bombs used by the military.
An April 2010 Government Accountability Office study put the shift to Chinese dominance in the rare earth minerals market in stark terms: “The United States previously performed all stages of the rare earth material supply chain, but now most rare earth materials processing is performed in China, giving it a dominant position that could affect worldwide supply and prices.”
The report spells out the consequences of China’s near monopoly of the supply of rare earth minerals, but also notes that rebuilding a U.S. rare earth supply chain could take as long as 15 years and would require “securing capital investments in processing infrastructure, developing new technologies, and acquiring patents, which are currently held by international companies.”
The embarrassing revelation that critical parts for top American military weapon systems such as General Dynamics’s M1A2 Abrams tank and Lockheed Martin’s Aegis SPY-1 radar brought about a call for congressional hearings on the issue, but it could be decades before an American supply chain for rare earth materials is rebuilt.
Change of dominance
The United States was not always so dependent on other countries for its mineral needs.
During the post-World War II era, as the need for uranium for atomic weapons to compete in the Cold War arms race grew, a rush of mineral prospecting took place throughout the southwest United States.
The discovery of sizable deposits of rare earth minerals, like flourocarbonate bastnaesite in the U.S. during the 1940s, proved to be of little use for uranium enrichment for bombs. But an element derived from bastnaesite, europium, was found to be essential for the production of the cathode ray tubes required for early color televisions.
With that, the industry exploded in the United States as major mineral companies like Molycorp Minerals took the lead in the extraction and trade of rare earth metals. Other American conglomerates – notably General Motors, General Dynamics and Lockheed Martin Corp – quickly developed new uses for the metals, among them sophisticated new lasers, night-vision goggles and improved radar.
Despite a wealth of rare earth minerals in the U.S., the manufacture of the minerals has become dominated by China.
In an intriguing report written earlier this year for the Institute for the Analysis of Global Security, researchers looked into the 1995 sale of Magnequench. The company was formed in 1986 by GM to manufacture neodymium-iron-boron magnets – powerful magnets that are used in everything from car engines to electrical power steering.
In 1995, two Chinese companies, likely seeing the potential military application of the product and catching GM as it was attempting to break into the Chinese market, acquired Magnequench for $70 million. The sale was approved by the U.S. government with the stipulation that the buyers keep the company in its hometown of Anderson, Indiana for five years.
The day after that deal expired in 2002, the Chinese company shut down the entire operation, shipped all its manufacturing equipment and resumed operations in China.
The research report noted, “In less than one decade, the permanent magnet market experienced a complete shift in leadership.”
The Magnequench sale represented a titanic shift in the competitive advantage of the United States and set the scene for the loss of America’s manufacturing dominance in the rare earth mineral industry.
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this is serious, yet while Rome burns, the tea pary fiddles their 'no gay marriage' tune
 - their pledge to America shows no grasp for real priorities, such as ending our dependence on oil rather than drilling 5 miles deep in the ocean or in the arctic
Steve : The Tea Party is not in power...the Dems and Repubs are. Don't try to attach the Tea Party to the current Dems or Repubs.
Oh like you were even aware of this before hand steve what makes you think the tea party or the democrats or the republicans were even really aware of this?
Their pledge shows total grasp of the real priorities. It's your pathetic idiot Obama that has no concept of priorities. He led the democrats off the cliff and they are going to pay for his incompetence this November.
Are you really that brainwashed?
Not really, Obama's policies stopped the recession from becoming something far, far worse. Basically, he saved America from the ignorance of the 'lower taxes, less government' crowd. Talk about going off a cliff, that's exactly where the tea party wants to lead America.
What fake reality do you live in? The Obama administration have been active since day one trying to fix the recession and health care. Tea Partiers and the Republicans are sitting on their asses saying "no" to everything so they can get back in power to ruin the country again. It's the Replicans mess the Democrats are cleaning up. Don't you forget that. GREED and POWER runs deep in the Republicans' bones. They don't care about the people and the future of this nation. All they care about are themselves. Just the ignorance in this country is ridiculous. You think everything is going to be ok just like that. It's going to take time to fix the mess the Bush administration left behind. Get your priorities straight and don't fall into the trap that is the GOP.
" sent shockwaves through U.S. businesses, economic planners and Pentagon strategists. ".....Really? What do you suppose we the Tax Payer, pay these brain trusts to have situations like this already figured out?
Jesus! The damn sky is falling! Just stuff a couple pounds of C-4 under a couple of those strategic oil and natural gas pipelines that run through some of those "Stans" east of China.......oooooops?...."No ticky.....NO laundry!"
stop using and depending on china for products. find other ways and leave them behind.
they already stole enough technology, and cant make any on their own, so now is the time to leave them in the dust and with old technology.
it seems obvious to me that the cause of the problem is that US corporation would sell their mothers for a price. let's get real, we have a trade imbalence because we encourage companies to go overseas. we manufacture overseas. what do you think, the countries that these manufacturing plants go to don't learn from what we build there. well the chinese waited five years to move the plant. you mean to say nobody figured that out when the sale was made. the us is in a slow decline at all levels. unfortuneately our demise will not be from the huns knocking on our gate, but from internal policies. rare earth metals are just the tip of the iceberg. there are other revelations just around the corner. The thought of it is scary.
It is indeed scary. Rather than worrying about immigrants taking our jobs we should be worrying about our politicians allowing corporations to take away our entire livelihood, if not the entire country. Let's face it - the U.S. is for sale to the highest bidder. The practice of selling businessses and landmarks to foreign investors has been going on for a while; so yes I agree that this is just a tip of the iceberg.
This is exactly why this country is going to he!! in a hand basket. The rich people that control the wealth don't give a damn about the American people, our economy or our middle class. All they care about is their own greed. They sell our technology to the highest bidder, therefore they get richer at the expense of American jobs. Thats their right but morally it's reprehensible! After China is kicking our azz militarily as well as economically I guess the greedy bastards will be satisfied.
Our mega corporations have caused this dilema. Our strenghth has always been manufacturing of all types. Now we are so dependent on China and Japan, it is actually frightening. Our infrastructure has been totally destroyed. We are now on the brinks of becoming a third world country. One glaring similarity the third world countries have , is as you might have guessed it. is that they have no viable manufacturing.
Both Unions and greedy management and government policy is ruining the good paying Blue Collar jobs. The middle class is suffering as a result.
Lets see in 1995 that would be a republican congress that let this happen. A deal for five years lol. Republicans are still that short sighted and so are the people that support them. They all believe that one day they will be rich enough to get into the party but dont realize that day will never come! Obama gave 95 percent of the country a tax cut and health care what have the republicans done for the last 24 months. Name one damn thing. Are you really that brainwashed? They can do nothing to save this country from a Great Depression (that they caused and happened on their watch)and you still give them your support? You are the one that is brainwashed. The least they could have done was say dam maybe we should help the people we screwed over out! But no they still want to give tax cuts to 3% of the population. Idiots the whole lot of them!
Oh please like the Democrats wouldn't have made the same decision if they were in power, in fact I dont' remember hearing the democrats back in 95 protesting against this decision.
It is amazing at how hindsight is 20/20 and how the democrats are now trying to politically capitalize on it even though they did nothing back in 95 to stop it, and you know why? Because they agreed with the sale.
The Chinese lack innovation but not cunning. They are smart enough to know they can't innovate and thus buy key companies that give them a competative advantage. Corporate greed for shortsided profits and politicians who are in bed with them to make it happen are to blame. Dem or Republican doesn't matter, they all pray at the alter of money. Unless we reclaim our innovations and re-implement making them here in the US we can kiss our competative future and the relative freedom and safety we enjoy goodbye we will live in the United States of Bejing.
Perfect Point!
Being the business whores that our county has become, we will gladly sell our future for a dollar sum today. The corporations will also happily shut down plants and put people out of work if it helps the bottom line or stock prices. Our manufacturing capabilities are disappearing rapidly and would take years to reappear. And with stock prices and the stock market up some people believe the recession is over, as recent headlines stating that the government reported the recession over as of June of 09. Completely out of touch with the real world of people out of work and losing homes. The stock market does NOT reflect all of society and the health of our nation's economic situation. This short term profit vision is all too typical these days, while China has much practical experience in taking the long view. Short Term Tactical thinking vs Long Term Strategic thinking. Duhhhhhh
Does the government think that China will become our ally against our enemies? They are in BED with our enemies!!! No wonder we are up ^$& creek! The government starting in the 1970's screwed us; they see all this evil that china does, and yet, "oh, go steal our jobs. Bend us over, itll be alright. Its cheap labor anyway" Maybe we should just break military ties with all countries, just so that if china decides to go to war with or embargo that country, over whatever sort of problem it might have, we are not dragged into it.
The USA has the rare-earth minerals in the USA. But the ECO-Nuts did not want this dirty industry in the USA. The EPA, US labor cost, and US Regulations are what moved this industry to CHINA. Just like the former US Steel Industry.
Though there are MANY good reasons to use China's resources FIRST and leave the US resources in the ground.
General Dynamics and Kaiser Steel screwed both Pomona AND Fontana! They leave or shut down and thousands loose their jobs and towns go south. Disgusting!
Dual Use, Arms embargo is the probably the best thing for China in the long run. Sure in the last 30 years it has had a hard time acquiring the latest cutting edge tech, but it has allowed China to develop its own Military-Industrial Complex, making its military immune from foreign or diplomatic pressure say embargoes or sales block. On the other hand if you look at say, S. Korea or Japan their nations rely on US to supply them with not only big budge aircraft and arms but parts and munitions to supply their forces making their defense and wellbeing reliant on our govt. willingness to sell. Alas we cannot use that on China.
If US were ever to left these protectionist measures, especially 20-30 more years down the road Chinese have much less if any in acquiring such technology as probably their industry would have caught up, much like they did with Russian tech. The primary reason they tend to reverse engineer things is because when you are generations behind in tech the fastest way to leap frog is reverse engineer, the gap is closing and for the foresee about future may end up gone.
What are we going to do about China....NOT A DAMN THING....we're too scared to take them on directly so we're beat our chest, shake our sticks and rattle our swords but in the end we won't do anything about China. Yeah I keep hearing how communism is evil and all but for some strange reason Chinese Communism is kicking our A** all over the place. So I would like to hear again from Republicans and Conservatives on how evil communism is when in fact it's whooping the dog s*** out of capitalism in China????
The worst is yet to come for the US when we discover one day that microchips used in missles, planes, ships, etc. are only manufactured in China. Thanks to the corporations that are hell-bent to maximize profits and outsource everything, and idiotic beliefs of those who think that everything should be privatized.
Japan is the big bully in Asia. The USA sahould mind their own business and get their own house in order. Oh, I forgot, The USA needs China'a money. Badmouth the banker that loans us the money for our new car.
I read recently where Afghanistan has a huge supply of rare earth. And guess what! China is signing deals for it already without firing a shot. Thanks USA!
Who needs corporate espionage when you can just buy the company instead? This is what all of you Americans wanted....free market capitalism. Enjoy!
why hasn't anyone mentioned that the u.s.government is 100% to blame for allowing our defense contractors to "outsource" our national security. how many jets and helicopters have gone down over the years because of inferior parts?
I know this is a dumb question but why can't the chinese create their own inventions, why do they find it necessary to steal, pirate or buy some other country's inventions. I know they are not a stupid people. So is it their government that holds the people back? Does anyone know?
The Chinese Government is extremely intelligent when it comes to getting the maximum bang for the Yuan spent. American taxpayers are on the hook for a near unlimited federal revenue cash transfer to America's immense defense contractors for research and development (R&D) where supercomputers, engineering teams and technical staff prepare multiple prototypes and then painstakingly pour over the real time results of those prototypes before determining the very best design and desired functionality.
Stealing the blueprints of the production line design is far cheaper than pouring several billion dollars into R&D with the distinct possibility of coming up with a 'dry well', nada, a failed project.
Example: The 3/4 sized computer controlled space shuttle which Russia rolled out was simply a nip and tuck on some stolen NASA blueprints of America's space shuttle, san's the Billions of dollars Russia would have spent to have derived that design by their own engineering teams.
China and Russia are also both really proficient in de-engineering a product. US Cruise missiles, Predator and Reaper Drones recovered in Afghanistan, Pakistan, Iraq all likely have been shipped back to both countrys where they were de-engineered.
Remember one simple saying respecting industry and politics. "Money talks and everything else walks." Jobs have been shipped out of this country for the last two decades because it made money. Peoples lives were sold out to make MORE profits. Sad isn't it.
Remember that this way of making money has also had the blessings of many powerful politicians.
For the sake of 70 million dollars, this country's self reliance on rare earth permanent magnets was sold down the river. A five year moratorium on moving Magnequench was supposed to be a protection? What foolishness on the part of the parties involved. But remember, someone or more are sitting on easy street with no worries. It should be against the law to sell jobs out of the country while making a profit.
Nuf said!
Duh, it took Americans to figure this out now?
No American wanted to do back breaking sweaty jobs in the agricultural fields; let's make the Mexicans do it. When Mexicans go on strike, no Americans want to do it, we have no food.
No American wanted to do scientific studies back in high school and college; let the Japanese do all the innovations. When the Japanese started making radios, cars, and TVs, and saw our innovations go down the drain.
No American wanted to do all the manufacturing of products anymore; let the Chinese do all the manufacturing for us. When the Chinese began making iPods, computers, high speed trains and wind farms, we found out...
THE USA MAKES NOTHING, INNOVATES NOTHING, AND PRODUCES NOTHING!!!
WAKE UP PEOPLE AND START REALIZING EVERYONE BROUGHT THIS UPON THEMSELVES. YOU DIDN'T STUDY BACK IN SCHOOL, YOU DIDN'T WANT TO WORK FOR LESS THAN $10 AN HOUR, YOU DIDN'T WANT TO BREAK A SWEAT DOING WORK, AND ALL WE DID WAS SPEND SPEND AND SPEND OUR WAY INTO DEBT WHICH THE CHINESE AND THE JAPANESE OWNING OVER $1 TRILLION DOLLARS OF US GOVERNMENT BONDS!
The US has skilled people. Very few of those skilled people have the work ethic sufficient to raise themselves above the entitlement mentality.
KEN , well said. I own a business around chicago area and employ over 40 people with high paying jobs. If i didn have eastern european and mexican workers my business would be in big trouble. Even today as high as unemployment is, i still dont see many people looking for jobs. Sometimes, i have had people with minimal skills asking for six figure salaries. The whole world has turned upside down. We have lost our hard work ethics and have become a country of easy money. We pay people to stay home and learn nothing. We pay our corporate executives tens of millions dollars of salleries. Nobody is worth that kind of money. We have reached the age of complete INCOMPETENCE from top to the bottom of our social strata. This great country of our has been DUMBED DOWN and the way back will be very distressfull.
In 1989 I met with a group of Chinese mining executives in Dalian. They were desperately trying to sell Rare Earths. Because of the seemingly lopsided trade imbalance at the time we were advised that it would be unlikely that we could obtain permission to import the semi refined ores. And, the federal Government felt there were sufficient deposits in the US to sustain US production. Now we have to buy the finished product fromChina?? I guess I knew this. Several years ago being curious about the state of art/development of rare earth magnents I couldn'tfind a single source in the US .
This we have proof once again of probably the greatest weakness of capitalism that will ultimately be our down fall as a nation: Capitalists are so greedy that they will sell the rope that eventually hangs them and they will end up killing the host, the USA and western world, that worshipped at the altar of the capitalistic free market.
Rare-earth is recyclable. There are plenty of it in common consumer products for military use, even if China cuts off supply completely. That's not to mention the strategic stockpiles in US and Japan. It might seem otherwise, but our government isn't as dumb as people makes it out to be. Restarting the mines is only matter of financing(somehow I doubt that would be a problem if it comes down to defense needs). As for the patents, US defense industry have the power to make use of any patent, if they for whatever reason not able to get a license. There's no vulnerbility, it's just special interest group trying to scare people.
The Bush Family in the White House have been the greatest Manchurian Candidates the World has ever seen in a foreign country outside of China that has benefited China and made China so wealthy.
Several months ago, I repeatedly pointed out that China's clear majority and stockpile's of domestic and oversea's leases of rare earth minerals and elements gives China the opportunity to deny sale of those to a nation which they desire to cut back on that nation's military buildup. And with China's Billions of citizens, China can logically point to their own people and state the Chinese consumers themselves need those rare earth minerals and elements.
The Bush Family torpedoed America's long partnership in Brazil literally pushing Brazil's friendship out the door and into the arms of the Chinese envoy's. Bush jr. repeatedly rewarded China with Afghanistan's natural resource leases, copper for example, likely Afghanistan's lithium deposits as well. All at a time when America badly needed Brazil's immense natural resources and steel manufacturing. The Bush Family crippled America at the expense of building up China, now China has the opportunity to really put the skids of the immense US Military complex if it choses to simply by saying NO to exports of it's rare earth minerals and elements from it's mines in China, mines in Brazil and mines across Africa.
Yep the Bush Family is making America safer by directly denying the critically needed rare earth elements needed to build US Submarines, Spy satellites and Various weapons systems. It seems the Universe has a sense of Irony.
A> SMITH you are completely correct. Bush family along with their cohorts is the worst plague unleashed onto this great country of ours. They have caused so much harm to this country that it will take over 50 years to correct. I would really try them for treason.